Double double trouble for Sydney burger joint in In-N-Out infringement case

What you need to know

• A Sydney burger business that imitated the well-known US burger chain In-N-Out Burgers, has been found liable for trade mark infringement, as well as misleading and deceptive conduct and passing off.
• The Court found that Hashtag Burgers deliberately chose the name Down-n-Out in order to obtain the benefit of market recognition of the In-N-Out brand.

What you need to do

• A foreign company with no permanent presence or place of business in Australia can still have registered trade marks and sufficient reputation to substantiate claims of misleading and deceptive conduct, and passing off.
• Australian traders should obtain trade mark clearance advice prior to adopting new brands and avoid appropriating famous overseas brands, even if those brands do little or no business on Australian soil.

"What is the line between inspiration and appropriation?  That is the question at the heart of the dispute in the present case" – Justice Katzman

Background

The famous burger chain In-N-Out Burger has over 300 restaurants throughout six US states.  But it has no locations in Australia, nor any local place of business.  The only burgers it has ever sold in this country have been at special one-day-only promotional pop-ups.  Yet, as the Federal Court heard in this case, In-N-Out enjoys a considerable reputation with Australian burger lovers, and is a 'must visit' for many Australian tourists heading to the West Coast of the USA.

Seeking to capitalise on Aussie's love of the In-N-Out menu, Sydney burger business, Hashtag Burgers, launched their Down-N-Out restaurants complete with 'Double-doubles' served Animal or Protein style, just like the real thing.  Apart from the name and menu cues, Down-N-Out also used a snappy yellow arrow logo; also just like the American chain.

Infringement Case

The Federal Court found that Down-N-Out infringed In-N-Out's device trade mark (above), and the word mark, IN-N-OUT BURGER.

Despite a different first syllable, the court considered that 'N-OUT' was the distinctive and significant feature, and an essential ingredient of the In-N-Out mark.  The design of the arrow in both marks was another point of similarity which reinforced the common directional idea of the marks.

The Court also considered instructions from Down-N-Out to its graphic designers to, "…make a sign like in n out burger", and then later, in the face of a cease and desist letter from In-N-Out, to delete the arrow from the logo.  But the directors confided that , "…everything together is enough to fool stupider people in society into thinking that we ARE In-N-Out".

The Court found it was proper to draw an inference that Down-N-Out had deliberately chosen its name and logo in order to appropriate In-N-Out's branding.  Although the directors of Down-N-Out were present in the Court, they did not give evidence, or provide any evidence suggesting that the copying was not dishonest.

The misleading and deceptive conduct and passing off claims followed the trade mark infringement claims, and Down-N-Out was found to have misled the public through branding at its venues, and through its website and social media accounts.

Interestingly, Justice Katzman also commented that it was irrelevant that a Down-N-Out press release made it clear that they were not selling In-N-Out burgers.  Justice Katzman cited authority that the infringement consisted of using the In-N-Out marks as trade marks.

Down-N-Out has indicated that it intends to appeal the decision.

Authors: Carrick Brough, Lawyer; Kellech Smith, Partner